EXCLUSIVE: Riau, Pertamina asked to resume negotiations on CPP block

President Abdurrahman Wahid and Vice President Megawati Soekarnoputri have asked state oil and gas company Pertamina and the Riau provincial administration to resume negotiations on the future development of the Coastal Plains Pekanbaru (CPP) oil block in Riau, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Purnomo said he together with Coordinating Minister for Economy Rizal Ramli, Coordinating Minister for Political, Social and Security Affairs Susilo Bambang Yudhoyono and Minister of Home Affairs Surjadi Soedirdja had met with the President and the Vice President on the deadlocked negotiations between Pertamina and the Riau provincial administration.

"The national leaders (President and Vice President) asked Pertamina and Riau to resume negotiations," he told Petromindo.Com Thursday evening.

He denied press reports quoting him as saying that the four ministers proposed to the President and Vice President that Pertamina be allowed to hold a 51 percent stake in the joint venture with Riau to develop the block.

The four ministers recently started discussing about the fate of the CPP block after Pertamina said it could not continue negotiations with Riau due to the wide gap in the demands of both parties.

Pertamina and Riau have agreed to set up a joint venture to develop the block after the current contract held by American oil and gas company PT Caltex Pacific Indonesia on the block expires in August next year. But Pertamina insists to hold a 51 percent in the joint venture, while Riau demands 71 percent shares.

Caltex has said it is also interested to continue developing the block, but it remains unclear if it still has chances to participate in the future development of the block. However, the Riau provincial council recently said the province would only team up with Pertamina in developing the block.

Caltex is a joint venture between American firms Chevron and Texaco, which recently announced merger.

The CPP block produced more than 70,000 barrels of oil per day at its peak production several years ago, but the output had decreased to less than 60,000 bpd due to the decrease in long-term investment by Caltex. Caltex said it reduced its long-term investment in the block due to uncertainties over its chances to participate in the future development of the block.

Caltex is the country's largest crude oil producer with a total output of more than 700,000 bpd from Riau. (Godang/Epin)